Quality Vs. Profit -- Newspaper Publishers Deny Trade-off

May 10, 1985|By Julia Reed of The Sentinel Staff

MIAMI BEACH — At a time when newspaper credibility is being severely questioned, some industry insiders fear that the drive of public news media companies to keep profits high will further damage the readers' faith.

But publishers attending the American Newspaper Publishers Association convention in Miami Beach said public companies do not necessarily sacrifice editorial quality for the sake of the bottom line.

James Hoge, publisher of the New York Daily News, said, ''There is a theoretical danger, for sure. But there always is if the motivation of the company -- whether public or private -- is simply to make money.''

The difference between public and private companies is that public companies owe it to their shareholders to keep earnings high.

And earnings indeed were on the publishers' minds as they strutted their stuff for news media stock analysts Thursday at the annual Morton Newspaper Forum, which will end today.

Companies such as The New York Times Co., which owns several Florida newspapers, including the Sarasota Herald-Tribune, The Ledger in Lakeland and the Leesburg Commercial; The Washington Post Co.; and the Tribune Co., which owns The Orlando Sentinel, the Chicago Tribune and the New York Daily News, all made presentations designed to persuade analysts to recommend their company's stock to clients.

So far, analysts have had reason to be impressed. Net income of The Washington Post Co., for example, rose 26 percent last year, to $85.9 million, up from $68.4 million in the previous year. Net income of the Tribune Co. almost doubled in 1984 to $103 million, up from $69.3 million in 1983.

It is those profits that have made news media companies attractive takeover targets in recent months. So far, such takeover attempts have been instigated only by companies with substantial news media holdings.

Donald Graham, publisher of The Washington Post, said, ''One of the basic things that decides whether a paper will be good or bad is the instincts and determination of management.''

''Whether a newspaper is owned by a public or a private company,'' he added, ''credibility lies in whether the company puts money back into the paper.''

Hoge pointed out, ''Big public media firms have tended to invest heavily in the editorial product, and that's one of the secrets of their success.''

Graham said the Post, for example, has opened a foreign bureau every year for the past five years and recently introduced a weekly tabloid devoted to health.

The New York Times Co. has boosted circulation and advertising of its smaller papers throughout the country by redesigning them and adding suburban editions.

Gannett Co., which owns more than 80 newspapers, including Today in Cocoa, has been criticized probably more than any other company for sacrificing editorial quality for profit.

After launching USA Today in 1982, the company ''borrowed'' employees from its other properties to fill the new paper's staff. Gannett executives now say there are no more ''loaners'' on staff.

John Seigenthaler, editor and publisher of the The Tennessean in Nashville -- a Gannett newspaper -- and editorial director of USA Today, said he ''made an awful lot of speeches'' warning of the dangers of ownership by public companies before becoming a part of Gannett. He said Thursday, however, that he has found larger companies have the ability to draw up sophisticated budgets that can leave the editorial side largely unscathed.

''If you look at the news and editorial budget and compare it to the rest of the company's expenditures, it's silly to cut there,'' Seigenthaler said. ''It's a relatively small percentage, and there are enormous ways to save in other areas. The company understands that if you don't have the money to run a news operation you can't cover the news.''

Gannett vice president Charles Overby was editor of The Clarion-Ledger in Jackson, Miss., when Gannett bought it from the Hederman family. Overby said the resources of the new owners enabled him to increase editorial salaries and expand the newspaper's use of color.

Overby also said editors are freed from having to bow to the whims and prejudices of an individual owner when a newspaper is owned by a large company. ''Readers know they have higher recourse.''